Legislature(2013 - 2014)BELTZ 105 (TSBldg)
02/18/2014 01:30 PM LABOR & COMMERCE
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SB 159-AIR AMBULANCE SERVICES 1:33:36 PM CO-CHAIR DUNLEAVY announced the consideration of SB 159."An Act relating to air ambulance service providers, air ambulance membership agreements, and regulation of air ambulance service providers and air ambulance membership agreements by the division of insurance; and providing for an effective date." 1:33:55 PM CHRISTIE JAMIESON, Staff, Senator Bert Stedman, sponsor of SB 159, introduced the bill on behalf of the sponsor. She read the following sponsor statement into the record: [Original punctuation provided.] Since January 2009, Airlift Northwest, the Seattle based provider of lifesaving air medical transport services, has offered the popular AirCare membership program to residents of Southeast Alaska. Over 1,600 Southeast households are enrolled in the program. Air medical transportation is expensive and insurance may not cover all the costs. The purpose of the AirCare program is to cover all out-of-pocket expenses such as deductibles and coinsurance amounts that may not be covered by the primary payer. As an AirCare member, only your insurance company receives a bill. Airlift Northwest is secondary to all payers and works directly with your insurance company for claims processing. The AirCare program directly helps fund Airlift Northwest so they can transport critically ill or injured patients to hospitals with levels of care not locally available. Since its inception, the AirCare program was offered to Alaskans under a regulatory exemption it received from the Alaska Division of Insurance. However, after an organizational restructuring, the Division of Insurance deemed the program no longer exempt from insurance regulation as stated in AS 21.87.010 under which Airlift Northwest was providing the program. As a result, the Division of Insurance ordered Airlift Northwest to cease enrolling new members. Airlift Northwest is allowed to honor their existing memberships but is not allowed to renew expired memberships. If Airlift Northwest wants to continue offering the AirCare program, then the program must either be fully insured by a health insurer authorized by Alaska or Airlift Northwest must obtain a certificate of authority pursuant to AS 21.09 to transact health insurance in Alaska. Since Airlift Northwest operates under the umbrella of University of Washington's medical system, becoming a licensed insurer in Alaska is not an option for them. Senate Bill 159 will exempt air ambulance services from the state's insurance code, thereby allowing Airlift Northwest to continue offering the AirCare program to Alaskans. 1:37:33 PM SENATOR OLSON asked the reason for the restructuring that eliminated the regulatory exemption. SENATOR STEDMAN suggested the Division of Insurance answer the question. SENATOR OLSON asked what other medevac services in the state would be affected by this legislation. MS. JAMIESON offered her understanding that Apollo [MT] from Fairbanks would also be affected and they haven't voiced an opinion on the legislation. SENATOR OLSON asked if Apollo MT is owned by an Alaskan company or an outside entity. MS. JAMIESON said she didn't know. SENATOR OLSON asked if Airlift Northwest and Guardian are ineligible to receive a certificate of insurance in Alaska because they're owned by outside entities. MS. JAMIESON said she didn't know. l1:39:19 PM SENATOR ELLIS joined the committee. SENATOR OLSON MARTY HESTER, Acting Director, Division of Insurance, introduced himself. SENATOR OLSON asked why the division undertook a regulatory change that eliminated the exemption. MARTY HESTER clarified that it wasn't the division that changed regulations. The division was approached by another company that wanted to offer similar membership agreements and operate under the same exemption as Airlift Northwest. The division deemed that the new company did not meet the Title 21 exemption. After inquiry, the division subsequently determined that Airlift Northwest no longer qualified for the exemption that was offered in 2008, because in 2010 the company restructured to become a nonprofit under the University of Washington. Airlift Northwest is considered a municipality under Washington statute and they petitioned the Division of Insurance to be considered a municipality under Alaska statute or a nonprofit medical service corporation under AS 21.87.010. After discussions with Department of Law, the division deemed that Airlift Northwest neither qualified as a municipality under Alaska statute nor as a nonprofit medical service corporation because they weren't offering a medical service. The company was in fact offering a benefit by waiving deductibles and coinsurance of members that purchased the agreements. Thus, the Division of Insurance contacted Airlift Northwest and asked the company to cease and desist. SENATOR OLSON commented that it sounds as though it was a reinterpretation of AS 21.87.010. MR. HESTER clarified that Airlift Northwest changed structure in 2010 to become a nonprofit under the University of Washington. Responding to further questions, he restated the forgoing explanation. SENATOR OLSON asked if Airlift Northwest aircraft are designated as public use aircraft since they're a municipality under Washington statute. MR. HESTER said he wasn't sure. 1:45:01 PM SENATOR OLSON offered his view that anybody who flies a sick person to get medical care is offering a service. He opined that the division did the people of Alaska a disservice by issuing the cease and desist order. He asked if it's true that medevac services are no longer available. MR. HESTER clarified that the division's determination was that an air ambulance service provider can't offer the membership agreement. They can still operate, but they can't offer the benefit to not balance bill the additional cost. SENATOR OLSON reiterated that this is working against the public interest and putting some people in dire straits. MR. HESTER responded that part of the mission statement of the Division of Insurance is to protect the consumer. In conjunction with Department of Law, the division determined that the product that was being offered by Airlift Northwest did not meet the required exemptions under AS 21.87.010. He also pointed out that a product was still available to Alaskans when this decision was made. The division determined that it was protecting consumers by applying the statute as it was written. SENATOR OLSON maintained that from a medical standpoint the decision is working to the detriment of the patient. 1:48:28 PM SENATOR STEDMAN voiced concern that the lack of competition is driving the price structure of air ambulance services. He asked the division's opinion about altering the statute to allow further competition. MR. HESTER responded that the division sees that SB 159 would provide consumer protections and allow additional business for products that Alaskans have asked for to be written in the state. SENATOR STEDMAN said he takes that as a statement of support for the bill. 1:50:06 PM MR. HESTER restated the division's mission statement to regulate the insurance industry to protect Alaskan consumers. He continued to say that consumers need products in Alaska and the state needs to be open for business to provide those products to Alaskans. SB 159 provides the protections that consumers need and allows the products consumers are asking for, he said. SENATOR STEDMAN disclosed that he is a licensed life and health insurance agent. 1:51:14 PM CO-CHAIR DUNLEAVY asked what happens to a member who needs a plane and one isn't available. MR. HESTER said the products that were sold in the past did not guarantee service and any sold in the future wouldn't either. Companies may decide to offer reciprocity but he couldn't speak to the specifics because he hadn't seen those products. CHAIR DUNLEAVY observed that something could be written into the agreement. MR. HESTER agreed. SENATOR MICCICHE referenced Section 2 subsection (c) on page 2, lines 6-9, and summarized that a third party isn't required to provide air ambulance service. He asked if state law requires somebody who is available to respond to a person who is in medical need. MR. HESTER offered to follow up with the answer. SENATOR MICCICHE asked if other companies currently operate under the existing exemption. MR. HESTER answered no, but one underwritten company is offering the product and it is compliance with Title 21. 1:54:08 PM SHELLY DEERING, Regional Manager, Airlift Northwest, Juneau, Alaska, introduced herself. CHRIS MARTIN, Executive Director, Airlift Northwest, University of Washington, Seattle, Washington, introduced herself. MS. DEERING said she is testifying in support of SB 159, which seeks to provide Alaskans with the ability to participate in membership programs for air medical transportation. She has been the regional manager of Airlift Northwest ("Airlift") for 21 years, and the company has been transporting patients from Southeast and other regions of Alaska for 32 years. She and the staff of 19 nurses and pilots live in Juneau. She explained that Airlift sold air care membership in Alaska from 2008 until November 2013 when the Division of Insurance asked the company to stop due to a restructure of Airlift Northwest and an interpretation of the regulations. Airlift currently has 4,066 members in the program that reside in Southeast. She said the Division of Insurance has been supportive of getting legislation that would allow Airlift and any other air ambulance company to sell memberships to Alaskans. SB 159 does this and also gives important oversight to the Division of Insurance. SENATOR MICCICHE observed that Section 1 appears to clarify that an air ambulance service provider would have to respond if it was available when there was a medical emergency, even if that company didn't have an agreement. He asked if his understanding was correct. MS. DEERING stated that Airlift Northwest responds to any emergent request it receives. The question of insurance isn't raised. SENATOR MICCICHE asked if she agrees that Section 1 requires that. MS. MARTIN agreed and also confirmed Ms. Deering's statement that Airlift responds to any request for emergent transport. It doesn't matter whether the person has an AirCare membership or insurance. She noted that last year Airlift did over $7 million in charity care. SENATOR MICCICHE read Section 1. 1:59:23 PM SENATOR STEDMAN disclosed that he may be an AirCare member. SENATOR OLSON asked how Airlift Northwest is able to stay in business in light of the ruling in Alaska. MS. MARTIN said the company has four bases in Washington state in addition to the base in Southeast Alaska, but the issue really isn't financial. It's the right thing to do for patients. 2:01:49 PM CHAIR DUNLEAVY opened public testimony. He found none. He commented that without air ambulance service, his wife and youngest child wouldn't have survived. He described the service as crucial to all Alaskans, particularly those in rural regions. CHAIR DUNLEAVY announced he would hold SB 159 in committee.